February | 2014
The governments of the United States and other leading nations have been launching concerted regulatory initiatives that seek to promote financial stability. A pivotal initiative, introduced by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), has been the creation of the Consumer Financial Protection Bureau (CFPB), an independent regulatory agency within the Federal Reserve System. The CFPB began taking consumer complaints about credit cards in July 2011, and has expanded its efforts to cover all types of consumer banking products to include mortgages, private student loans, and other consumer bank products and services. The primary objective of the act is to manage “conduct risk” and /or prevent UDAAP (Unfair Deceptive Acts and Practices) violations, while striving to maintain public confidence in the banking system. A recent example of UDAAP violations can be seen with the 2012 CFPB punitive fines to many US card issuers for the marketing actions of both internal and 3rd party customer contact representatives in the sale of Add On Products, debt protection insurance, reward programs, and unemployment coverage.
Highlights of the legislation
The overview of CFPB gives you an idea on how it will help the consumers but it also had implications on banks which I will cover in my next blog.
Do you think the Dodd Frank Act can help consumers? Do write in with your views.
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